The crisis of the environment poses a threat to the life support systems of the earth as much as to our national economy. People living on this "planet in peril" are rethinking development to incorporate environmental concerns into the process of economic growth. So must we in Pakistan. Current policy thinking in Pakistan is premised on the presumed efficacy of the market mechanism and so focusses entirely on economic growth through 'liberating' markets. The environment issue is excluded from the growth agenda. It may therefore be therapeutic to introduce the concept of sustainable development into this single minded devotion to markets and growth.

The integration of the need to balance economic growth with the imperative to conserve the natural environment has come to be known by the term Sustainable Development. It is defined as development that enables the needs of the present generation to be fulfilled without undermining the ability of future generations to fulfill their needs.

When the first UN World Commission on Environment and Development in the mid 1980s, led by the Norwegian Prime Minister Mrs. Brundtland, conducted its hearings with some of us in South Asia, three dimensions emerged as being essential to Sustainable Development:

(1)        The concept of economic growth must be redefined in terms of quantitative measurement to incorporate the environmental costs of producing and consuming commodities. This was based on the recognition of an inherent limitation of the market mechanism: individual investors consider environmental damage to be an "external" cost and therefore it is not included in the private profitability calculus on which project choice, and thereby the overall growth process is based. This view introduced the need to 'govern' markets to include the social cost of environmental damage into private as well as public sector investment decisions.

(2)        Equity must be integrated with economic growth. The idea here was that inequality and high levels of poverty may place such acute stresses on society that the sustainability of growth could be undermined. Thus was introduced the idea that poverty reduction cannot simply be seen as the 'trickle down' effect of growth, but rather must be an independent policy objective. Here again there was a recognition that the market mechanism, left on its own, could well increase inequality (as it has actually done in many countries). Furthermore poverty reduction through market based growth may not be fast enough.

(3)        A concern for the welfare of future generations must modulate the attempt by the present generation to maximize its own material welfare. The idea here was that technological change, production methods and waste disposal practices, must be shaped by public policy so as to minimize environmental damage: Hence the notion of "Green Growth".

The UN WCED Report catalyzed not only the new field of Environmental Economics, but also led to a new policy framework: Governments across the world are now attempting to craft new institutional structures that could shape project selection, technological change, forms of production and social life for Sustainable Development.